Citi has issued a research report stating that following an analyst briefing and an update to its KION model, it has lowered its revenue forecasts for Weichai Power Co.,Ltd. (02338) for 2026 to 2028 by 3% to 8%, and reduced its net profit forecasts for 2026 and 2027 by 5% and 1% respectively.
Based on an unchanged forecast 2026 price-to-earnings ratio of 23 times, the target price has been cut from HK$50 to HK$48, while the "Buy" rating is maintained. The bank expects dividend yields of 5% and 7% for 2026 and 2027 respectively.
The report notes that the downward revisions are mainly due to a 1% to 2% reduction in KION revenue forecasts; a 1% to 3% cut in revenue for the whole vehicle and key components segment amid pressure on LNG heavy truck engines; and a 1% to 2% lowering of agricultural equipment revenue forecasts due to weaker competitiveness of high-end products relative to global manufacturers.
At the same time, the bank raised its 2026 to 2027 AIDC-related revenue forecasts by 2% to 7% to reflect gas engine shipment guidance (an estimated 2,000 units in 2027), but lowered its 2028 revenue forecast amid market concerns over the sustainability of artificial intelligence capital expenditure and a slower pace of shipments.
Gross margin forecasts were also revised downward in line with the KION downgrade and the normalization of gross margins in 2028.
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